Background Note on National Research Foundation Bill, 2023

Background

India has come a long way from being a purchaser and importer of science and technology to investing in devising its own. The country has a pool of skilled manpower with scientific vigor and caliber. However, the higher educational institutions (HEIs) in India lack orientation for research. The Prime Minister’s Science, Technology, and Innovation Advisory Council reports that only less than 1% of higher education institutions (HEIs) indulge in research. Even among those 1 % of HEIs that are responsible for the majority of scientific innovation, various factors hinder the conduct of high-quality research. ^[1]
India’s spending on research and development (R&D) is currently one of the lowest globally, accounting for around 0.7% of its GDP^[2]. Out of this, the government undertakes 60% of the funding, while the private sector contributes only 40%³. This disparity can be attributed to factors such as the complicated process of patents which takes 3 years compared to the global average of 2 years^[3], a focus of private companies on short-term profit, and a general aversion to taking risks in R&D ventures.
While eminent institutions such as the Indian Institutes of Technology (IITs) and the Indian Institute of Science (IISc) have the bulk of research funding, State Universities have as less as 10% of the funds^[4]. Approx 40,000 higher-education institutions are run by the States, and more than 95% of students pursuing higher education go to State-funded universities and colleges⁶. However, it has been noted that these establishments have a limited capacity for research. This makes it difficult for State Universities to attract and retain top researchers and scholars, and to purchase the necessary equipment and supplies to support research, such as laboratories, libraries, and computer centers.
With India’s growing presence in the world economy, and to truly embrace the demographic dividend, it is the need of the hour to improve its research capabilities and technical expertise in the country. Hence, in order to mitigate these gaps and challenges in India’s research ecosystem, to boost the country’s R&D, and to align it with the New Education Policy, the Government is proposing a National Research Foundation Bill in the Monsoon Session of the Parliament in 2023.

[1] Fixing India’s R&D inadequacies, The Hindu Businessline, February, 2023 accessed at

https://www.thehindubusinessline.com/opinion/fixing-indias-rd-inadequacies/article66557197.ece

[2] India’s R&D spends amongst the lowest in the world: NITI Aayog study, Economic Time, July, 2023, accessed at

https://economictimes.indiatimes.com/news/india/indias-rd-spends-amongst-the-lowest-in-the-world-niti-aayog-study/ar ticleshow/93024586.cms ³ibid

[3] Time taken to grant a patent in different countries : a comparative analysis, Pleaders, October, 2021, accessed at https://blog.ipleaders.in/time-taken-to-grant-a-patent-in-different-countries-a-comparative-analysis/

[4] Can India’s new billion-dollar funding agency boost research?, Nature, July 2023, accessed at https://www.nature.com/articles/d41586-023-02336-8 ⁶ibid

Overview of the Bill

Based on the recommendations of the National Education Policy (NEP) 2020^[1], the National Research Foundation Bill, 2023 intends to merge all research funding agencies of the government into a single entity named National Research Foundation (NRF). The Bill will empower the NRF to provide strategic direction for scientific research and oversee basic and high-quality innovations in the country^[2]^[3]. This apex body will be established during 2023-28 at an estimated cost of Rs. 50,000 crores^[4].
According to the Bill, the Governing body of NRF will be constituted with the Prime Minister as ex-officio President and Union Ministers of Education and Science & Technology as ex-officio Vice-Presidents. The NRF’s Executive Council will be headed by the Principal Scientific Adviser to the Government of India and the Department of Science and Technology (DST) will be the administrative department of NRF. NRF’s Governing Body will also be composed of distinguished researchers and professionals of all disciplines, as reflected in the Bill. Research funding and identification of priority areas will be the primary functions of the Executive Council. ^[5]
The Bill also provisions to forge private-sector investments and partnerships for funding research activities in the country. For the same, the Bill envisions NRF to synergize the industry, academia, and research institutions, with the concerned government departments of State and Central Ministries. ¹¹
As mentioned in the NEP 2020, in the context of emerging Artificial Intelligence (AI) technologies, the NRF will have an added responsibility in advancing core AI research, envisaging application-based research, and facilitating international AI-based research for addressing global challenges such as climate change, healthcare, etc. ^[6]
The NRF will also support research in institutes and universities in all classical languages, Indian arts, art history, Indology, etc according to the NEP 2020. Preservation efforts and associated research in history, archaeology, linguistics, etc. will also be funded by NRF^[7].
The proposed Bill will simplify the Indian Patent Act of 1970 by streamlining the patent application process, clarifying the patentability criteria, introducing a grace period, and simplifying the patent examination process^[8].
By the enactment of the National Research Foundation Bill, the Science and Engineering Research Board (SERB) established under the SERB Act of 2008^[9] will be repealed, and the SERB will be subsumed into the NRF.^[10]
However, as the Government has no say in directing private companies’ decisions on choosing sectors for Corporate Social Responsibility (CSR) spending, the large-scale tapping of CSR funds for NRF projects is not possible due to the existing nature of CSR provisions. But since CSR expenditure in India is significant (an aggregate of Rs 14,588 crores during 2021-22), untapping these funds is beyond comprehension. Hence, it is reported that guidelines regarding the spending of CSR funds and/or providing tax incentives to corporates for CSR spending on NRF will be included in the Bill. ¹⁷

[1] India planning to simplify patent laws to spur R&D: Official, The Economic Times, May, 2023, accessed at India planning to simplify patent laws to spur R&D: Official – The Economic Times.

[2] Government today said that there is a need to amend the IPR policy to take care of Changing opportunities, PIB, May

[3] , accessed at https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1921390

[4] Ibid

[5] Cabinet approves Introduction of National Research Foundation Bill, 2023 in Parliament to strengthen research eco-system in the country, PIB Jun 2023, Accessed at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1935895 ¹¹Cabinet approves Bill for National Research Foundation to make research more equitable – The Hindu, June, 2023, accessed at

https://www.thehindu.com/news/national/cabinet-nod-to-set-up-national-research-foundation-to-boost-r-and-d/article67 019297.ece

[6] https://www.education.gov.in/sites/upload_files/mhrd/files/NEP_Final_English_0.pdf

[7] Ibid

[8] ‘IBID’ 2

[9] About SERB, accessed at: SERB

[10] Cabinet approves Introduction of National Research Foundation Bill, 2023 in Parliament to strengthen research eco-system in the country, PIB Jun 2023, Accessed at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1935895 ¹⁷Proposed National Research Foundation looks to tap CSR funds, The Hindu, July 2023, accessed at: Proposed National Research Foundation looks to tap CSR funds – The Hindu

Significance of the Bill

The Bill proposes the establishment of the National Research Foundation (NRF) with the objective to catalyze quality research in the country. It will create a policy framework and facilitate the collaboration of various Central and State Government departments with the industry. This will establish regulatory processes to forge collaborations among the industry, academia, government departments, and research institutions^[1] to boost funding and knowledge-sharing of research in India.
The two main objectives of the NRF are to boost private sector contribution to research in India and ensure that a greater portion of the funds apportioned by the government makes its way to State universities and colleges. This will also give due weightage to research in curriculum among State Universities and other less-endowed educational institutions. The NRF will competitively fund research in all disciplines of social sciences as well. Thriving research will be recognized, and where relevant, research outcomes will be implemented through close linkages with governmental agencies as well as with industry and private/philanthropic organizations^[2], facilitating sharing of resources and expertise. The funding provided to the State Universities via NRF, will also improve the infrastructure at State Universities that can facilitate research.
Further, NRF will create an environment that attracts private investment which will unlock a potential influx of up to ₹36,000 crore in research funding over the next five years from investments from industries and philanthropists, while the remaining amount will be funded by the Government^[3]. Additionally, the Bill is also striving to work out a way to attract CSR funds by providing tax incentives for companies that invest in research.
The NRF constituted under the Bill will facilitate research and development in India’s 1,074 universities and 161 research institutions, which include the IITs, NITs (National Institutes of Technology), AIIMS (All India Institute of Medical Sciences), and IISER (Indian Institutes of Science Education and Research)^[4].
The expansion of the purview of NRF to Indian languages and arts will aid the current efforts to preserve and promote tribal, endangered, and classical languages. Further, this is expected to boost cultural-related TVET (Technical and Vocational Education and Training) and employment in the country.

[1] Cabinet approves Introduction of National Research Foundation Bill, 2023 in Parliament to strengthen research eco-system in the country, PIB, June 2023, accessed at https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1935895

[2] Ministry of Education, Government of India, NEP accessed at https://www.education.gov.in/sites/upload_files/mhrd/files/NEP_Final_English_0.pdf

[3] Cabinet approves introduction of National Research Foundation Bill in Parliament, The Hindustan Times, June-2023, accessed at https://www.hindustantimes.com/india-news/cabinet-approves-introduction-of-national-research-foundation-bill-in-parlia ment-101687979490944.html

[4] Despite NRF initiative, R&D has a long way to go in India, The Tribune, July, 2023, accessed at https://www.tribuneindia.com/news/comment/despite-nrf-initiative-rd-has-a-long-way-to-go-in-india-523376

Challenges/Cons of the Bill

The Bill places huge dependence on the private sector for investments in research; it is expected by the government that between 2023-28, around ₹36,000 crore investments are estimated to be raised from the private sector^[1]^[2]. It is to be seen whether the dynamic structure of the Indian economy and market conditions have been taken into account while making such an overestimation for R&D investments in the country. Moreover, the over-dependency created on the private sector for pumping investments in the country for research, would create a chance for conflicts of interest between the Government and private sector, and it

is likely that the priorities of the private sector will keep on changing with respect to global trends and aspirations. There is also an apprehension that the larger investments from the private sector would lead to projects that promise higher profits rather than projects that address public needs. This will also make it hard for the government to regulate and ensure accountability over the direction and execution of these projects.

Extensive dependence of NRF on the private sector may lead to biased/inclined research funding and lobbying of research areas. This may not be in the best interest of the statutory standing and principle of equity in R&D being proposed by the NRF.
Since NRF will be merging and replacing all existing research bodies, there is a high chance that the importance given to R&D in non-core ministries/departments will be substantially reduced. Further, if mega projects are to be implemented in mission mode, then funds for other research activities will be scarce^[3], impeding the R&D of remaining projects.
As the top positions of Governing Board of NRF are reserved for members of the Government, it might not be in the best interest of the autonomous status of the NRF^[4]. This might create an impression that matters pertaining to R&D are centralized^[5].
It is observed that the Bill makes no mention of how the NRF will guarantee transparency and equitability in seeding and provisioning funds to State Universities and less-endowed institutions. The modalities for monitoring outcomes of NRF are also not mentioned in Bill. ^[6]

Areas that need further deliberation

Considering that 70% (Rs 36,000 crores) of the funds under NRF will be raised from the private sector, the Government will need to undertake measures to incentivize the private sector entities in investing in research areas proposed by the Government. ^[7]
To mitigate the challenges that may arise due to over-dependence on the private sector, the Government will have to strike a balance, maintain transparent processes, and establish regulation on the extent of involvement of the private-sector in decisions of NRF. Moreover, as the proposed Bill has overlooked the monitoring mechanisms and measures to be established for ensuring transparency in funding, utilization funding and administration, it is important to incorporate modalities of monitoring so that the expected positive impact of the NRF is

delivered. ^[8]

While the various research bodies will be merged into a single entity, it is critical to ensure that all ministries are given equal representation and that small-scale research proposals are not disregarded^[9]. Nevertheless, if a higher share of the NRF funds goes to top universities and premier institutes, this will once again suffocate the R&D activities in State universities and less-endowed institutions. Hence, due consideration should be given to maintain an equitable distribution of funds for both Central and State Universities.
Also by considering the Prime Minister’s Research Fellows (PMRF) Scheme and similar schemes as frontrunners of research funding programmes, the Government should evaluate the impact and shortcomings of those programmes, and come up with a strategy to overcome and address these glitches in the new NRF Bill.

DISCLAIMER: The opinions expressed herein are entirely those of the author(s). Swaniti makes every effort to use reliable and comprehensive information, but Swaniti does not represent that the contents of the report are accurate or complete. Swaniti is a non-profit, non-partisan group. This document has been prepared without regard to the objectives or opinions of those who may receive it.

[NOTE: This Bill analysis is prepared on the basis of information and materials available in media sources or the public domain only. The Bill is yet to be introduced in the Parliament, hence, the note will be updated as and when a text of the Bill is available]

[1] NRF Bill: Industry SPV to identify tech gaps, drive & fund R&D, The Economic Times, July 2023, accessed at:

https://economictimes.indiatimes.com/news/india/nrf-bill-industry-spv-to-identify-tech-gaps-drive-fund-rd/articleshow/10

[2] .cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[3] For science to flourish: National Research Foundation plugs a policy gap, The Indian Express, July 2023, accessed at:

https://indianexpress.com/article/opinion/columns/smoothing-the-path-of-science-8699558/

[4] National Research Foundation (NRF) Bill, 2023 | Prelim Bits | Current Affairs